Telecom on the list for big Australian project

Telecom's Australian unit, Telecom Corporation of New Zealand Australia (TCNZA), is understood to be short-listed for another big contract in Australia, this time with insurance company NRMA Insurance, recently renamed IAG Ltd.

Telecom 18 months ago won a $A500 million ($618 million) five-year contract with IAG's 10 per cent owner, Commonwealth Bank of Australia (CBA).

Telecom won't comment on whether it has been short-listed for the IAG contract.



Singapore Telecommunications-owned Optus is also understood to be in the running for the contract.

The contract would provide a critical fillip to revenues and earnings for TCNZA, which, like all telcos, is struggling to increase its revenue.

As part of the CBA deal, the bank took a 5 per cent stake in TCNZA, with the option to increase its interest to 35 per cent at any time during the life of the contract. It is believed TCNZA has offered a similar equity component to IAG as well as a discounted price for services. TCNZA is also understood to be trying to line up several other large contracts.

Telecom uses TCNZA rather than its Australian unit AAPT, because there is a supplier-client relationship between TCNZA and AAPT and Telecom likes to keep TCNZA at arms length so it can source services from different telcos.

- NZPA